K+S Potash Canada Roundtable SIMSA Sam Farris Thomas Papst Eric - - PowerPoint PPT Presentation

K+S Potash Canada Roundtable SIMSA Sam Farris Thomas Papst Eric Cline Sarah Thompson January 31, 2018

Agenda

1. About the K+S Group 2. K+S Potash Canada and Bethune mine 3. Potash Market 4. KSPC Safety 5. Maintenance and Reliability 6. Capital Projects and Technology 7. Land and Sustainable Development 8. Procurement

About the K+S Group

About the K+S Group

• One of the world’s leading suppliers of

standard and specialty fertilizers

• World’s fifth largest potash producer
• World’s largest supplier of salt
• Production sites throughout Europe, as

well as North and South America

• More than 14,000 employees worldwide

Salt Business Unit Complementary Activities Potash and Magnesium Products Business Unit

K+S Group

• Unique position in Europe and specialty fertilizers
• Bethune will strengthen our global presence
• Salt business to improve earnings substantially
• Ongoing cost reductions and efficiency improvements
• Dividend payout of 40-50%

About the K+S Group

Shaping 2030

• K+S Group strategy launched in

Fall 2017

• Phase 1: Transformation
• Phase 2: Growth
• Maximize production/

minimize cost

K+S Potash Canada and Bethune mine

Bethune Mine: Introduction

• Bethune mine is a greenfield

solution potash mine.

• Saskatchewan's first new potash

mine in over 40 years.

• Potash production began in June

2017 and we are on track to meet

• ur 2018 sales plan.
• The gradual extension of the

annual capacity to 2.86 million tonnes will occur in subsequent years.

Bethune Products

Once Bethune is in production, K+S Potash Canada will extract potash crude salt, which will be further processed to three different products of potassium chloride:

• MOP standard white
• MOP granular
• KCl 99 compacted

MOP granular and MOP standard are used as natural fertilizers all over the world; KCl 99 compacted is used in a variety of industrial applications.

Bethune mine

Partnership with Canadian Pacific

• To ensure a rail connection, KSPC

partnered with Canadian Pacific (CP). Potash bound for port will transported by CP from the Bethune mine.

• In spring 2017, CP completed the 30

km Belle Plaine subdivision, a new line of rail that links Bethune mine to existing CP track near Belle Plaine.

• KSPC also completed and additional

14 km of rail line that links CP's new track to a loop at the potash mine’s loading facilities and 6 km of storage track adjacent to its line. This ~20 km

• f line is owned and will be operated

by KSPC.

Potash Market

Long-Term Dynamics Positive for Fertilizer

4.300 m 2.100 m 1.800 m1

Global population development Arable Land per capita Protein per capita

60 g/ day 80 g/ day 130 g/ day1

Jahr 3.0 billion

Less arable land – but more protein consumption per capita

Each year additional 80m people need to be fed – this equals to the population of Germany Available arable land per capita will decrease at the same time By 2050 an expanded world population will be consuming two thirds more animal protein than it does today

In 2050, only roughly a quarter of a soccer field will be available to feed one person year round - 80 percent of future growth in crop production will come from yield advancements driven by balanced use of fertilizers

6.9 billion 9.7 billion

1960 2010 2050

Sources: UN, World Population Prospects, 2012 Revision, UNDP, 2013; FAOStat 2014

1 FAO 2014 - forecasts based on the expected increase in animal protein

World Potash Supply and Demand

Production is driven by demand despite continuous excess capacity

1.000 t (product)

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15 Technical available capacity Sales volumes Production

Quelle: IFA (preliminary), K+S; incl. sulphate of potash and low grade potash of about 4 million tonnes eff. (product)

Potash Price Comparisons

200 300 400 500 600 200 300 400 500 600

Basis: Q1 2012 Basis: Q1 2014 K+S average selling price versus selected peers MOP gran. Europe vs. Brazil (Source: FMB)

Europe

(€/t, Granular, cfr)

Brazil

(US$/t, Granular, cfr)

US$/t €/t

Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2014 Q1 2015 Q1 2016 Q1 2017

K+S K+S 2012 2013 2014 2015 2016 2017 Peers Peers

KSPC Safety

Safety our top Priority

• SMA Safety Award past four years
• Committed to Mission: Zero
• Excellent safety performance during

Legacy Project and Port construction

• Safe transition from construction through

commissioning and into operations

Safety – Our Top Priority

Contractor Management

• Health and safety management and

performance a primary component of contractor pre-qualification

• ISNetworld for pre-qualification
• > 65% of ISN registered contractors had

TRIFR below 1.00

• KSPC managed contractors TRIFR in 2017

was 0.98

ISNetworld

ISNetworld

Maintenance and Reliability

Maintenance and Reliability Vision

• To be world-class in maintenance and

reliability performance

• To be transparent and collaborative

partners

• To focus on practices that are safe, people-

centred, innovative and sustainable.

• To perform an asset management
• ptimization with all necessary technical

administrative and managerial actions to maintain the Bethune plant in a safe and sustainable manner.

Maintenance and Reliability Mission

• To perform an asset management
• ptimization with all necessary technical

administrative and managerial actions to maintain the Bethune plant in a safe and sustainable manner in order to produce potash:

• In an efficient way (93% equipment

availability – 8150 hrs./y)

• At the best price (1.8% Replacement

Asset Value - RAV)

• In conformity with regulations and

policies.

Maintenance and Reliability

In order to be successful we need to perform Proactive Reliability Centred Maintenance (RCM) instead of traditional reactive maintenance. For that:

• 70% of our load will be Preventative and Predictive maintenance.
• 20% of our load will be planned Corrective maintenance
• We will have only 10% of unplanned Emergency work

Contractor Strategy – 80/20 Approach

KSPC Employees

• Millwright/Industrial Mechanic
• Machinist
• Electrician (high/medium voltage and

motors)

• Instrumentation expert
• Programmer/PCS
• Pipefitter
• Welder
• Overhaul equipment (partial, small and

frequent) Target = 80% KSPC employees vs 20% Contractor

Contractor Strategy

• Scaffolding
• Painting and sandblasting
• Belt repair – vulcanization
• Insulating
• Rubber lining (with expertise

in-house)

• FRP (with expertise in-house)
• Lighting job
• Refractory
• Gas Turbines (with expertise

in-house) Contractor requirements

• Elevators
• Overhead doors
• HVAC (heating, ventilation &

air conditioning, gas fitting)

• Truck and mobile equipment

maintenance

• Carpenter
• Boilermaker
• Road and yard maintenance
• Overhaul equipment (big and

infrequent)

• Big shutdown

April, 2017

Marc Colombet Maintenance Manager Fred Drew Maintenance Superintendent Tom Steiner Planning Superintendent Contract SAP Data Entry Admin (2) Ravi Ramdeo PdM Supervisor Alberto Osorio Evaporation Reliability Specialist Luke Betker Wet End Potash Reliability Specialist Yaqoot Mir Dry End Reliability Specialist Kevin Mostat Utilities/TF Reliability Specialist Mike Kuntz HV Reliability Specialist Dale Wourms Wellfield & Workshop Reliability Specialist Mohamed Nosseir Controls Engineer Brian Peever Civil Engineer Lijun Xu Mechanical Engineer Mazhar Hasnain Mechanical Engineer Ray Obi Mechanical Engineer George Pangan Utilities/TF Planner Aaron Holma Dry End Planner Rob Enns HV Planner Jason Hauser Evaporation Planner Lindsay Pay Wellfield & Workshop Planner Juan Marino Facilities Planner Greg Reis Wet End Potash Planner Tony Cote Maintenance Shop Supervisor Randy Freeze Wet End Potash

• Maint. Supervisor

Casey Olson Utilities/TF Maintenance Supervisor Brian Hajdukiewicz Dry End Maintenance Supervisor Paul Ruel Evaporation Maintenance Supervisor Litao Lian Programming Supervisor Jeff Braaten HV Supervisor Steve Durk Facilities & Fleet Supervisor Luc Poisant Wellfield Maintenance Supervisor Chad Binsfeld. Core System Superintendent Marian Pietrasik Reliability Superintendent Jayson Laron Electrical Engineer 24/7 SV 5 shifts

Kris Ross/Scott Gibney Tony Glasser Mike Holmes/Brian Joyes

K+S Day trades team Per area 38 people Contractors supervision

135 +3+3+2 = 143 people

Workshop Trades 4 people 4 Programmers

Jason Jones Brad Forsyth NN NN

HV Trades (2)

Kyle Springinatic Daric Manz

Brent King Instrumentation technologist Master data SAP Admin(2)

Shelan Dueck Sheena Klassen

PdM Techs: 3

Landon Chess Schawn Ostergard Dereck Ross

24/7 trades 5 shifts (5 Trades/shift) 25 people Rebecca Brunet Admin assistant

2 departments

Rev 22

Mark Sax Plant Engineering Superintendent QA/QC Coordinators Ben Engen Kevin Gibbs Orlando Amaral Data AVEVA Admin Suman Choudhary SAP PM Expert Lloyd Spearchief Maintenance Coordinator Tanner Kittler Instrumentation SME Brice Programmer Shauna Morrison Technical Document Admin Chris Brooks Crane Operator Boyd Jeffrey Machinist Chad Morash Process Equipment SME Lize Hofman Tool Crib attendant NN Drafter Supervisor 4 Drafters

Dillon Franko, maricris Sapa, Brad Meyer, Puxi Yu

Jason Nernberg Electrical SME Sam McKay Scaffolding & Insulation SV Abdullah Mamum AS Built Coordinator

Organization – Roles and Responsibilities

The maintenance and reliability department is divided in five pillars:  Planning group  Execution group  Core System group  Reliability group  Plant engineering group

Capital Project and Technology

Capital Projects and Technology

• Major Capital Projects are executed by

the Projects and Technology Team

• Team is located in Saskatoon and at the

Bethune mine

• Project Responsibility for Bethune mine

and Port Moody

• Acting as contact to headquarters in

Germany as center of excellence

Project Execution

• Stage gate approach
• Engineering (FEL Stages) in-house with

third party support if required

• Secondment strategy preferred
• Project execution with core team third

party support

FEL 0 Idea Generation and Capture FEL 1 Pre-Feasibility FEL 2 Feasibility FEL 3 Planning) Execution Completion and Close Out

Future Major Capex Projects

• Wellpad program
• 4th compaction loop
• Secondary mining
• Ongoing optimization
• Expansion projects
• Feasibilities

Continuous Improvements

• Continuous improvement of product

quality and reliability

• Increase plant flexibility to react to

fluctuating market conditions

• Increase production rate
• Project support for Bethune mine and

Port Moody

Wellpad Program

• Ongoing pad construction
• Long-term approach is one pad per year
• Further design improvements
• Engineering in-house
• Execution with third party support

Summary

• Pad program
• Continuous improvements
• Secondary mining
• Base Capex
• Logistics

Land and Sustainable Development

Responsibilities include:

• Permitting
• Environmental monitoring and compliance
• Land management: stewardship, purchase,

leasing and sales

• Mineral rights acquisition: leasing and

sales

• Unitization
• Geology
• Community, industry and government

liaison

• Indigenous employment and contracting

support

KSPC Policy (Adopted May 2012)

• targeted efforts to be inclusive of indigenous people in employment and

contracting

Employment

Corporate Objectives: 1. To be an employer of choice for Indigenous people. 2. To create a respectful and representative workforce that supports diverse values and cultures. 3. To actively attract, recruit, develop and retain Indigenous people. 4. To educate all KSPC employees about cultural diversity in Saskatchewan through Indigenous Awareness training. 5. To inform KSPC contractors about Indigenous labour force development programs and services.

Where appropriate KSPC will:

• Build relationships with Indigenous communities, First Nations and

Métis employment agencies and Tribal Councils, and Métis regions and locals to source qualified candidates

• Support KSPC affinity groups
• Present at post-secondary institutions
• Utilize KSPC summer student employment and co-op programs
• Utilize KSPC scholarship and bursary initiatives
• Participate in Indigenous related conferences and symposia

Employment of Indigenous people can be:

• Direct – KSPC employees at site or

corporate offices

• Contractual (long- or short-term)

companies selected through a competitive bidding process. Companies may be Indigenous-owned or non-Indigenous-

• wned companies with a large presence of

Indigenous employees.

Sustainability

Resource companies must be sustainable economically, environmentally and socially. They must:

• Operate at a profit
• Safeguard the environment by complying

with or exceeding all environmental laws and regulations.

• Be socially acceptable to the community at

large.

KSPC Initiatives

• Replacement of disturbed wetlands

through contribution to Ducks Unlimited for wetlands conservation ($2.8M)

• Replacement of disturbed natural

grassland to Nature Conservancy Canada (~$1M)

• Local community partnerships:
• RM of Dufferin – road paving joint

initiative – ~$5 million from KSPC

• Village of Bethune – sewage lagoon

expansion (>$5 million)

Community Investment

• KSPC has given over $3.5 million to

communities through sponsorships and donations since 2012

• More than $1.5 million has been invested

into Indigenous communities since 2012

• Over 200 organizations have been

supported since 2012

Community Investment Highlights

Procurement

KSPC Procurement Team

Sarah Thompson,

• Sr. Manager.

Procurement & Materials Management Lowell Berg, Superintendent, Procuremtent Kevin Reed,

• Sr. Buyer

Amber Bates, Buyer Megan Berg, Buyer Lindsy Hermann, Buyer Robin Stotz, Buyer Colin Staruiala, Contracts Specialist - Projects Sameer Saran,

• Sr. Specialist,

Contracts Shawn Purcell, Contracts Specialist (Temp) Danka Spiric, Procuerment Coordinator Nordia Steward, Procurement Coordinator

Procurement KPIs

• Safety and Environment: Track the number
• f incidents
• Procurement Cycle Time: Measure of time

between release of purchase requisition to release of purchase order

• Supplier Delivery Compliance: Measures

the % of late deliveries compared to

• riginal quoted delivery dates
• Spend on Contract: Value of supplier

spend on contract

• Savings: savings compared to budget and

negotiated savings over lowest original quoted price

Procurement Agreements

We intend to leverage vendors and contractors to help us maintain our facility. We are in the process of tendering and awarding Master Service Agreements and Fixed Pricing Agreements. Terms will vary from one to three years with the option to extend. All agreements are being or have been competitively bid with the exception of when OEM parts or services are required to maintain warranties.

What does K+S value in a Supplier?

• Safety
• Quality product or service
• On-time delivery
• Competitive pricing
• Indigenous content
• Local content
• Value-add initiatives

Insurance Requirements

• 5M CGL (Commercial General Liability)

insurance is our standard requirement.

• $5M Professional Liability/E&O (Errors &

Omissions) insurance is our standard requirement.

• ISN will always maintain our standard limits

and coverage requirements.

K+S values bidders and suppliers who have meaningful involvement with Indigenous entities and demonstrate they have real and substantial involvement by Indigenous people through:

• contracting
• wnership
• employment
• ther arranged commitments in a manner

which is seen as positive initiatives which enrich the lives and well-being of Indigenous people.

Indigenous Content Requirements

Indigenous Contracting

All contracting is in accordance with KSPC guidelines, directions, and requirements of quality, competitive pricing, community factors and overall value. Where appropriate, KSPC will:

• Take proactive approaches to identify and match contracts with

Indigenous businesses

• Provide positive consideration in bid evaluations for Indigenous content
• Develop internal support measures for Indigenous procurement policy

• 526 local contractors and suppliers

were engaged

• $290 million + was awarded to local

companies

• $84 million + was awarded to

companies with Indigenous involvement

Local and Indigenous Spend 2017

Contractor Labor Tracking

The Legacy “Yellow Pages”

• Indigenous and local contractors are asked

to submit “one pagers” outlining their company and the work they do. PROCUREMENT@ks-potashcanada.com These one pagers are put into the KSPC Yellow Pages.

• Larger contractors are recommended to

propose how they intend to subcontract to local and Indigenous vendors.

• Smaller vendors are encouraged to join

forces to take on projects they may not

• therwise be able to manage.

Questions?